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Summary Audit Report Accurately Describes the Findings of the Verification Audit

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Summary Audit Report Accurately Describes the Findings of the Verification Audit SUPPLY CHAIN AUDIT SUMMARY POYLUS LOGISTICS VERNINSKOYE SUPPLY CHAIN, RUSSIA MARCH 2021 Prepared by WARDELL ARMSTRONG INTERNATIONAL Sir Henry Doulton House, Forge Lane, Etruria Stoke on Trent, Staffordshire, United Kingdom www.wardell-armstrong.com Page 1 SUMM ARY AUDIT REPORT Name of Mine: Verninskoye Mine Name of Mine Owner: Polyus Name of Operation: Polyus Logistics Verninskoye Supply Chain Name of Responsible Manager: Sergey Shoshkin Address: Bodaybo State/Province: Irkutsk Region Country: Russia E-Mail: [email protected] The Auditor has been provided with all supporting documentation to accompany the audit. During the site visit a photographic record was made. This information remains with the Auditor at WAI and if needed provided to ICMI. Polyus Logistics Verninskoye Supply Chain March 2021 Page 2 SUMM ARY AUDIT REPORT Summary 1.1 Background and Location Verninskoye mine is located close to Bodaybo in the Irkutsk region, Eastern Siberia, Russia (see Figure 1). Polyus and Polyus Logistics both have offices in Bodaybo. Bodaybo is 1,135km by road (900km by air) away from the city of Irkutsk and c 400km from Tamisko (major rail link). Bodaybo has a wharf (used by Polyus Logistics) on the right bank of the Vitim River and close to where the Bodaybo River flows into the Vitim River. Bodaybo is a major base of the Lena-Vitim gold industry region. Bodaybo traces its history back to 1864 as a location for warehouses for the storage of provisions for the gold industry for the region and steadily grew. Bodaybo was made a city in 1925 and is an established community of approximately 22,000 people. Verninskoye lies 130 km to the north of the Bodaybo city district centre in the northern part of the Bodaybo Administrative District, Irkutsk Region (see Figure 1), Russia. The nearest village, Kropotkin, to the mine is 6 km. Figure 1: Irkutsk Region, Eastern Siberia, Russia Polyus acquired Verninskoye mine in 2005, and the process plant was commissioned in December 2011. The operation currently has an estimated remaining life of 33 years. Polyus Logistics is the logistical supply and transport company for the Polyus group. The ICMI cyanide audit was undertaken on Verninskoye process plant and Polyus Logistics Bodaybo in February 2019 by Lead Cyanide Auditor, Christine Blackmore. Polyus Logistics Verninskoye Supply Chain March 2021 Page 3 SUMM ARY AUDIT REPORT Overview of Project Polyus purchases its sodium cyanide for Verninskoye mine from Saratovorgsontez JSC, Russia (Saratov). Saratov became a signatory to the ICMI Code in March 2015 and was fully accredited in April 2017. The cyanide is uploaded to rail cars by Saratov and transported by Russian Rail (RZD) through Russia by train (5,200 km) to Taksimo station where it is diverted on to Polyus`s own spur rail line to their good receiving depot. The Auditor visited both Taksimo station and Polyus rail depot in order to fulfil segments of the audit. Polyus Logistics (PL). PL are responsible for the rail spur and off-loading cranes, road haulage and the small roll on roll off (SP-9) used in the summer months to cross the Vitim river at Bodaido. All of the facilities were audited and visited by the Auditor except for SP-9 Ferry. A remote Due Diligence (DD) was undertaken on the ferry (summary Due Diligence report attached). See Figures 2 and 3. Cyanide is delivered to Verninskoye four times a year by these routes. The PL ferry is only used in Summer and Autumn Figure 3 shows the logistical supply chain. There is only one road route to Verninskoye from Taksimo, this is through the mountains, however the road is adequate and has been approved by the Russian Federation Authorities (RFA). Procedures and risk assessments have been undertaken to ensure the safe transportation of Cyanide to site. Figure 2: Winter Working, Figure 3: Summer Working Figure 4 shows the route map from Taksimo to Verninskoye. The Auditor travelled the route during the site visit for the audit, in order to visit the Taksimo facilities and confirm segments of the audit. Polyus Logistics Verninskoye Supply Chain March 2021 Page 4 SUMM ARY AUDIT REPORT Figure 4: Route Takismo to Verninskoye Mining is by conventional shovel-and-truck methods with the process plant utilising gravity concentration, flotation and carbon-in-leach (CIL) method to produce a gold dore. Annual gold production are a result of several ongoing development projects, including various improvements to the crushing, grinding, flotation and hydrometallurgy circuits. Polyus continue to work toward expanding throughput to 3.5Mt/a. The process plant operates as per the illustrative flow sheet (Figure 5). Tailings produced from the gold recovery process are sent to a purpose-built Tailings Storage Facility (TSF). Polyus Logistics Verninskoye Supply Chain March 2021 Page 5 SUMM ARY AUDIT REPORT Figure 5: Verninskoye Block Flow Diagram Polyus Logistics Verninskoye Supply Chain March 2021 Page 6 SUMM ARY AUDIT REPORT Auditor’s Finding This operation is ☒ in full compliance ☐ in substantial compliance *(see below) ☐ not in compliance with the International Cyanide Management Code. Audit Company: Wardell Armstrong International (WAI Ltd) Audit Team Leader: Christine Blackmore E-mail: [email protected] Names and Signatures of Other Auditors: Date(s) of Audit: Site visit 3-8 February 2019 I attest that I meet the criteria for knowledge, experience and conflict of interest for Code Verification Audit Team Leader, established by the International Cyanide Management Institute and that all members of the audit team meet the applicable criteria established by the International Cyanide Management Institute for Code Verification Auditors. I attest that this Summary Audit Report accurately describes the findings of the verification audit. I further attest that the verification audit was conducted in a professional manner in accordance with the International Cyanide Management Code Verification Protocol for Cyanide Transportation Operations and using standard and accepted practices for health, safety and environmental audits. The Auditor has been provided with all supporting documentation to accompany the audit. During the site visit a photographic record was made. This information remains with the Auditor at WAI and if needed provided to ICMI. Novem ber 2020 Verninskoye Mine Polyus Logistics Verninskoye Supply Chain March 2021 Page 7 SUMM ARY AUDIT REPORT 1. TRANSPORT: Transport cyanide in a manner that minimizes the potential for accidents and releases. Transport Practice 1.1: Select cyanide transport routes to minimize the potential for accidents and releases. ☒ in full compliance with The operation is ☐ in substantial compliance with Transport Practice 1.1 ☐ not in compliance with Summarize the basis for this Finding/Deficiencies Identified: There is only one cyanide transportation route available. This has been approved by the Russian Federation Authorities (RFA), from Taksimo village, Buryat Republic to the Verninskiy Mine of Polyus Verninkoye, Irkutskaya Oblast. Polyus Logistics has its own spur line from Taksimo station’s points, approximately 2km, but the train and railcars are operated by Russian Rail (RZD). PL have their own unloading yard and cranes. Each cyanide shipment times are assessed with the aim to minimize risks to the population and the environment and considers the natural terrain and weather conditions at all times. Distance between PL Taksimo railway branch and the Verninskiy Mine of Polyus Verninskoye is 380km in the summer/autumn and 400km in the winter. The difference resulting from the use of a ferry to cross the Vitim River which is possible during the summer months. A due diligence (DD) audit has been undertaken for the ferry (SP-9), and forms part of this submission. Biannually, PL obtains a Permit from the Transport Police in the form of a Dangerous Cargo Transportation Certificate. The Auditor has been provided with the date stamped certificate, valid to 26 November 2020. Cyanide is delivered monthly except during the impassable months (April-May, November- December) with every shipment varying between 60-80 tonnes. PL implements necessary procedures to evaluate the risks and takes the necessary measures to manage these risks. The measures include obtaining a RFA approval for the selected route, vehicle maintenance, personnel training in emergency response (ER), ER equipment on each vehicle, communications and trackers etc. PL has prepared an internal procedure to evaluate the transportation routes and seeks RFA approval to undertake transportation of cyanide. Renewal of the approval is every six months. PL documents the measures taken to address risks identified with the approved cyanide transportation routes. The process was discussed and demonstrated and documents presented to the satisfaction of the Auditor. Polyus Logistics Verninskoye Supply Chain March 2021 Page 8 SUMM ARY AUDIT REPORT In the selection of the cyanide transportation routes, PL seeks input and official approval from the RFA. The cyanide transportation vehicles are only driven by the International Agreement for the transportation of Dangerous Goods by Road (ADR) certified drivers who strictly observe the established protocols. Due to weather conditions no cyanide transportation is made in the following months: April-May and November-December. When transporting cyanide PL uses security escorts (SpetsSvyaz LLC) at all times and also has an agreement with TSASO company to provide rescue and other emergency response services if needed. Transport Practice
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